Report: State and local governments have $6.1 trillion in debt

State and local governments had $6.1 trillion in debt at the end of 2023, a new Reason Foundation analysis finds. On a per capita basis, state and local debt amounts to approximately $18,400 per American. This state and local debt is in addition to the $38 trillion national debt.

Of the $6.1 trillion in state and local debt, $2.66 trillion is held by state governments, $1.4 trillion by municipalities, $1.27 trillion by school districts, and $757 billion by counties.

Reason Foundation’s State and Local Government Finance Report finds that $1 trillion is owed by California’s state and local governments, most in the country.

New York’s state and local debt is the second-highest in the nation, at $798 billion, followed by Texas’s $550 billion in state and local debt, Illinois’s $407 billion, New Jersey’s $310 billion, and Florida’s $242 billion.

Additionally, Massachusetts, Pennsylvania, Ohio, Washington, Michigan, Georgia, Maryland, Connecticut, North Carolina, and Colorado each have more than $100 billion in state and local government debt.

At the end of 2023, the most recent year for which complete data is available, 48 of the 50 states had at least $10 billion in total debt.

Only Vermont ($8.8 billion) and South Dakota ($5.9 billion) had less than $10 billion in state and local debt.

State and local government debt includes both short- and long-term obligations—from salaries due at the end of this month to bonds maturing decades from now. The $6.1 trillion in liabilities includes $1.5 trillion in public pension obligations, and $958 billion for retiree health care obligations,

In per capita terms, New York’s state and local debt is the highest in the nation. New York’s state government, cities, counties, and school districts hold debt of $39,491 per resident. This is more than double the national average of about $18,400, according to Reason Foundation’s analysis.

In addition to New York, four other states had per capita state and local debt exceeding $30,000 per resident at the end of 2023: Connecticut ($34,592), New Jersey ($33,338), Illinois ($31,783), and Hawaii ($30,399).

Massachusetts, California, Alaska, North Dakota, Delaware, Wyoming, and Maryland also had state and local liabilities of over $20,000 per resident.

Texas ranked next highest, 13th overall, with $18,872 in debt per Texan. Florida ranked 32nd, with $11,217 per person.

State and local debt was lowest in Idaho, Indiana, South Dakota, Tennessee, and Oklahoma, where the liabilities were less than $7,500 per resident at the end of 2023.

State and local government long-term debt

About 80% of state and local debt is long-term, meaning it is due in more than a year. This long-term debt category consists of bonds, loans, and notes (41% of the total), unfunded public pension liabilities (32%), unfunded retiree health care benefits (20%), and accrued leave payouts (2%).

Nationally, state and local governments reported $4.9 trillion in long-term debt at the end of 2023, Reason Foundation’s State and Local Government Finance Report finds. On a per capita basis, long-term debt amounts to approximately $14,700 in state and local debt for every person in the United States.

California, New York, Texas, Illinois, and New Jersey hold the largest long-term debt totals. Together, these five states account for $2.5 trillion, over half of the national total of $4.9 trillion in long-term liabilities.

There are 14 states where long-term state and local debt exceeds $100 billion, and 36 states where it is more than $20 billion.

In per capita terms, New York reported the most state and local long-term debt, at $31,369 per New Yorker, followed closely by New Jersey’s long-term state and local debt of $31,064 per person.

State and local long-term debt exceeds $20,000 per person in Connecticut ($30,998), Illinois ($28,291), Hawaii ($26,271), Massachusetts ($24,520), and California ($20,280).

Texas ranked 10th, with $15,818 per capita in long-term debt, and Florida ranked 30th, with $8,926 per Floridian.

Idaho, South Dakota, Indiana, Oklahoma, and Tennessee have the lowest long-term debt, with each state having less than $5,200 per resident.

State and local government pension debt

Unfunded public employee retirement liabilities, also known as public pension debt, form when governments set aside fewer assets than required to fulfill promised benefits.

Nationally, state and local governments reported $1.5 trillion in pension debt, or 32% of long-term liabilities, at the end of 2023. On a per capita basis, this state and local public pension debt amounts to approximately $4,600 per American.

California carries the most total state and local public pension debt in the nation, with $269 billion in unfunded liabilities.

Illinois ($228 billion in unfunded liabilities) reported the second most public pension debt in the country.

New Jersey ($98 billion in pension debt), Texas ($96 billion), Pennsylvania ($70 billion), New York ($63 billion), and Florida ($62 billion) all had unfunded pension liabilities exceeding $60 billion at the end of 2023.

These top seven states account for more than half of the nation’s state and local pension debt.

In per capita terms, Illinois has the most unfunded pension liabilities: $17,786 per resident.

Connecticut ($12,997) and New Jersey ($10,601) were the two other states with public pension debt exceeding $10,000 per capita.

Massachusetts, Alaska, Kentucky, and Hawaii are the next highest, with each state’s per capita pension debt reaching over $7,000 per person, well above the national average of about $4,600.

California, despite its large aggregate pension burden, ranks only 8th in per capita pension debt, with $6,796 per resident.

Texas ranks 29th in per capita public pension debt, at $3,277 per resident, and Florida ranks 33rd, with $2,868 per resident.

Two states, Washington and South Dakota, reported no public pension debt in 2023.

State and local government OPEB debt

Other post-employment benefits (OPEB) primarily consist of unfunded retiree health care promised to public employees. Unlike pension benefits, most governments have not pre-funded these obligations, leaving other post-employment benefits (OPEB) almost entirely unfunded.

Nationally, state and local governments report $958 billion in OPEB debt, which accounts for 20% of their long-term liabilities. On a per capita basis, OPEB debt equals about $2,900 per American.

New York reports the largest aggregate OPEB debt among its state and local governments in the country. With $303 billion in OPEB debt at the end of 2023, New York is responsible for about one-third of the nation’s aggregate OPEB debt.

California has the second-highest OPEB debt, with over $147 billion, followed by New Jersey ($98 billion) and Texas ($77 billion).

Eleven other states have at least $10 billion in OPEB debt.

In per capita terms, New York again ranks first, with $15,017 in OPEB debt for each New Yorker.

New Jersey follows with $10,599 per capita OPEB debt, Delaware with $8,448 per capita, Connecticut with $6,657, and Massachusetts with $6,308.

California ranks 8th, at $3,712 per resident. Texas ranks 10th, at $2,649, and Florida ranks 29th, at $689.

Alaska, Ohio, Utah, Idaho, and South Dakota report OPEB debt of less than $110 per resident.

State and local outstanding bonded debt

Bonds, loans, and notes represent the portion of state and local liabilities explicitly borrowed in credit markets. Unlike pensions or OPEB, which accumulate as estimated unfunded promises, these instruments are contractual debt obligations with fixed repayment schedules.

Nationally, state and local governments report $2 trillion in outstanding bonds, loans, and notes, which represents 41% of their long-term liabilities. On a per capita basis, this equals $6,100 per resident.

California leads with the largest stock of outstanding bonds and loans, totaling $334 billion across state and local issuers.

Texas owes $287 billion in outstanding bonds and loans, followed by New York ($197 billion), Illinois ($98 billion), and Florida ($81 billion).

Together, these five states account for about half of all outstanding municipal bonds and loans.

The per capita rankings differ significantly. Hawaii owes $14,295 per Hawaiian in bonds and loans.

Connecticut and Massachusetts follow, owing more than $10,000 per resident. Texas, New York, and North Dakota, with more than $9,000 per resident, are next.

Montana, Wyoming, Idaho, and Alabama each have less than $2,000 of bonded debt per resident.

Reason Foundation’s State and Local Government Finance Report totals the liabilities of each state government, as well as the cities, towns, counties, and school districts within each state. This report covers all 50 state governments, over 2,000 county governments, 8,000 municipal governments, and 10,000 school districts, which serve 331 million Americans nationwide.

All figures in the State and Local Government Finance Report are sourced from the financial reports of state and local governments, most often their annual comprehensive financial reports. The data is from the 2023 fiscal year, the most recent year for which complete data are available. Nevada and a handful of cities and counties across the country have not reported 2023 data. Therefore, the data reported for 2022 was used. Despite a thorough review, data collection at this scale can result in discrepancies. Please alert us if you identify any errors.

For personalized reports on municipal entities or more detailed information on assets, liquidity, and solvency, please visit the GovFinance Dashboard.

If you have any questions or would like to discuss this data more, please email Mariana Trujillo at mariana.trujillo@reason.org or Jordan Campbell at jordan.campbell@reason.org.

Related:

Report ranks every state’s total debt, from California’s $497 billion to South Dakota’s $2 billion

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Source: https://reason.org/transparency-project/gov-finance-2025/